GERMAN ECONOMY
DIW economic institute says business activity stagnant / Researchers see weak start to summer / Country reports first monthly trade deficit in 30 years
The German economic motor is sputtering (Photo: Pexels, Cottonbro)
Normally a summer mood looks a lot sunnier: the economic barometer from the German Institute for Economic Research (DIW, Berlin; www.diw.de) was at 94 points in June, a value below the magic 100 mark that delineates growth from contraction.

At least the barometer has risen some 10 points versus May. Contrary to what was feared in the spring, the German economy has not crashed, DIW economist Guido Baldi said. However, he noted that the war in Ukraine and ongoing coronavirus issues will continue to burden economic activity. One consequence has been continuing high inflation, which has also been supported by the looming gas shortage in Europe and the fear of an unchecked increase in energy prices.

In addition, business activity problems extend beyond Germany. Economic development is also slowing noticeably in the rest of Europe, the US and China. “As an export-oriented economy, Germany is particularly feeling the effects of the weakening global economy,” Baldi said, noting that German industry has reported significantly fewer new orders, especially from abroad.
Imports outpace exports for first time since early 90s
The month of May brought news that Europe’s most populous country and the rest of the world had not heard in over 30 years: Germany reported a monthly trade deficit, the first since 1991, according to data from the country’s statistics office Destatis. Analysts said the EUR 1 bn more in imports than exports was due to higher prices for incoming goods and trade disruptions.

According to Baldi’s calculations, the order backlog is still high across almost all sectors. However, it can only be processed slowly because of global supply chain interruptions and shortages of preliminary products.

In addition, high inflation has noticeably reduced household purchasing power. “The start of the summer has been gloomy for the German economy,” Baldi said. “In the summer months, the gross domestic product is unlikely to increase noticeably.”
07.07.2022 Plasteurope.com [250715-0]
Published on 07.07.2022
DIW-Studie: Deutsche Wirtschaft wächst nichtGerman version of this article...

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